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P.A. Mohammed, J.—The Petitioner-firm is a registered dealer under the provisions of the Kerala General Sales Tax Act, 1963 (for short ''the Act'') on the file of the second Respondent, Sales Tax Officer, 1st Circle, Tellicherry. It mainly challenges the notification, S.R.O. No. 495/90, dated 31st March 1990 deleting the exemption to the dealers from payment of sales tax in respect of footwear costing not more than Rs. 20 per pair.
The material facts that lie in short compass are thus: The Petitioner-firm deals in cheaper variety of footwear costing less than Rs. 20 a pair. The Petitioner firm filed monthly returns in form 8 and paid tax thereon in respect of each month of the year 1989-90. However, the first Respondent in pursuance of the budget proposals for 1989-90 issued notification No. S.R.O. 504/89 on 31st March 1989 u/s 10 of the Act exempting from sales tax, sale of seven items of goods including footwear costing not more than Rs. 20. When the Petitioner came to know about the exemption from newspapers it discontinued collection of tax on the Sale value of footwear costing not more than Rs. 20 from 1st April 1989. The dealer filed the annual return for the year 1989-90 declaring the total turnover of Rs. 10,52,291 and taxable turnover of Rs. 20,495 claiming exemption on a turnover of Rs. 10,31,776 in view of the notification referred to above. For the subsequent years 1990-91 and 1991-92 the Petitioner filed similar returns claiming exemption as above. However, the first Respondent issued Anr. notification, S.R.O. 495/90 on 31st March 1990 exempting footwear manufacturers in the State having turnover not exceeding Rs. 5,00,000 in the year on the sale of footwear by them in respect of leather for use by them in the manufacture of footwear on the basis of the declaration annexed to the notification. At the same time the notification by the last para deleted items 3 and 5 of notification S.R.O. 504/89 and thus taken away exemption available in respect of the sale of footwear costing not more than Rs. 20 with effect from 1st April 1990. The Petitioner was not aware of the notification withdrawing the exemption available as per the notification S.R.O. 504/89. Later the second Respondent issued two notices directing payment of tax for the year 1990-91 and 1991-92 in respect of the turnover involved in the sale of footwear which was exempted as per S.R.O. 504/89. Exts. P-1 and P-2 are the copies of those notices issued by the second Respondent demanding payment of tax and proposing penal action in default of payment. In the aforesaid situation, the Assessee filed the present petition challenging these Exts. P-1 and P-2 notices. It is further prayed in the writ petition to declare the notification S.R.O. 495/90 in so far as it deletes item 3 from the list of 7 items notified in S.R.O. 504/89 invalid.
Subsequent to the filing of the writ petition the Petitioner received Ext. P-3 notice dated 13th January 1991 issued by the second Respondent proposing to assess the Petitioner provisionally for the months of April 1991 to November 1991. In reply to the said notice the Assessee sent Ext. P-4 letter to the assessing authority requesting adjournment in view of the pendency of the present writ petition. Since the Petitioner has not filed any objection the second Respondent has passed Ext. P-5 provisional assessment order dated 3rd February 1992 for the months of April 1991 to November 1991 finding that the claim of exemption is inadmissible. Consequently, the second Respondent issued Ext. P-6 demand notice dated 4th February 1992 calling upon the Petitioner to pay sales tax on the turnover of Rs. 2,15,250 for the months of April 1991 to November 1991. Ext. P-7 is the copy of the demand notice calling upon the Assessee to pay the surcharge. Thereupon the Assessee took steps to amend the present writ petition by filing C.M.P. No. 3703 of 1992 with an additional prayer to quash Exts. P-3, P-5, P-6 and P-7 issued by the second Respondent. The writ petition was accordingly amended incorporating the above prayers and also grounds in support thereof.
The notification in respect of S.R.O. No. 504/89 came into force with effect from 1st April 1989 (hereinafter referred to as ''first notification''). The relevant portion of the said notification is as follows:
S.R.O. No. 504/89.-In exercise of the powers conferred by Section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963) the Government of Kerala, having considered it necessary in the public interest so to do, hereby make an exemption in respect of tax payable under the said Act, on the sale of the following goods, namely:
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Footwear costing not more than Rs. 20 (Rupees twenty) per pair
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This notification shall come into force with effect from 1st day of April 1989.
Prior to this notification, the footwear of all kinds was taxable on the point of first sale in the State at the rate of 8 per cent as provided in Entry 76 of the 1st Schedule to the Act. In so far as the assessment year 1989-90 the above notification is applicable and hence the Petitioner is not liable to pay tax as provided in Entry 76 of the 1st Schedule to the Act in respect of the sale of footwear. There is no dispute in this writ petition regarding the exemption claimed by the Petitioner for the year 1989-90.
The exemption granted in respect of footwear during the year 1989-99 as per the above notification was taken away by virtue of the notification relating to S.R.O. No. 495/90 (hereinafter referred to as second notification�) published on 31st March 1990. The relevant portion of the said notification is as follows:
S.R.O. No. 495/90.-In exercise of the powers conferred by Section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963), the Government of Kerala having considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act (i) on the sale of goods specified in Schedule I and (ii) by the persons specified in Schedule II below in regard to their turnover on the sale of purchase of goods mentioned against each, subject to the conditions specified therein, namely:
Schedule I
* * * * * Schedule II
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Footwear manufacturers in the State having turnover not exceeding rupees five lakhs in a year on the sale of footwear by them and on the purchase of leather for use by them in the manufacture of footwear, on furnishing declaration annexed to this notification.
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Items 3 and 5 of the notification in G.O. (P) 69/89/TD, dated 31st March 1989, published as S.R.O. No. 504/89 in the Kerala Gazette Extraordinary No. 303, dated 31st March 1989 shall be deleted. This notification shall come into force with effect from the 1st day of April 1990.
Declaration
Declaration for the purpose of item 2 of the Schedule II of notification in S.R.O. No. 495/90.
I/we...(here enter the name and full postal address of the purchaser) manufacturers of leather footwear having Sales Tax Registration Certificate No�issued by the Sales Tax Officer...have purchased leather of the description shown below from Shri/M/s...(here enter the name and full address of the selling dealer) with Registration Certificate No...issued by the Sales Tax Officer...which is intended for use in the manufacture of footwear by us for sale.
Details of Purchase
Bill No. and Date Quantity Value I/we hereby declare that the above statements are true to the best of my/our knowledge and belief.
Place: Signature Date: Name of the person, signing the declaration status of the person signing the declaration in relation to the business. [Notn. G.O. (P) No. 64/90/T.D., dated 31st March 1990 published in Kerala Gazette Ex. 351, dated 31st March 1990.]
In view of the above notification exemption in respect of footwear as provided in the first notification was deleted. At the same time, the footwear manufacturers in the State having turnover not exceeding rupees five lakhs in a year are exempted from payment of sales tax on the sale of footwear by them and on the purchase of leather for use by them in the manufacture of footwear on furnishing declarations annexed to the notification.
The dispute in this writ petition relates to payment of Sales Tax during the year 1991-92. If the first notification granting exemption in respect of sale of footwear as provided therein was not withdrawn the Assessee could have enjoyed the benefit of exemption for the year 1990-91 and 1991-92. Therefore the Petitioner is aggrieved by the second notification deleting the exemption already granted during the year 1989-90.
Firstly it was contended that the second notification deleting exemption contravenes the provisions contained in Section 20 of the Kerala Interpretation and General Clauses Act, 1125, which is as follows:
Power to make to include power to add to, amend, vary or rescind, orders, rules or bylaws.-Where, by any Act, a power to issue notifications, Orders, rules or bylaws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions, if any, to add to, amend, vary or rescind my notifications, orders, rules or bylaws so issued.
The principle that emerges from the above section is a rule of construction. The rule in the present context is that power to issue notification includes the power to add, amend, vary or rescind it. The power to rescind a notification can be exercised in the same manner as the issue of a notification. It is also subject to the sanction and condition, if any for the issuance of notification. Therefore the power to cancel or modify must inevitably be exercised within the limits prescribed by the provision conferring the said power. The Supreme Court while considering Section 21 of the General Clauses Act, 1897 which is pari materia to the provisions contained in Section 20 of the Kerala Act observed in Kamla Prasad Khetan Vs. The Union of India (UOI), thus:
The power to issue an order under any Central Act includes a power to amend the order; but this power is subject to a very important qualification and the qualification is contained in the words ''exercisable in the like manner and subject to the like sanction and conditions (if any)''...The true scope and effect of the expression ''subject to the like conditions (if any)'' occurring in Section 21 of the General Clauses Act has been explained.
Thus the source of power to issue notification u/s 20 of the Act if could be traced, the exercise of that power could only be in the same manner as provided therein. In other words, the power to cancel or delete exemption granted by the first notification shall be exercised only on satisfying the conditions specified in Section 10 of the Act under which the first as well as the second notifications are issued.
Section 10 of the Act so far as it is relevant for the present purpose is extracted hereunder:
Power of Government to grant exemption and reduction in rate of tax.-(1) The Government may, if they consider it necessary in the public interest, by notification in the Gazette, make an exemption or reduction in rate, either prospectively or retrospectively in respect of any tax payable under this Act,
(i) on the sale or purchase of any specified goods or class of goods, at all points or at a specified point or points in the series of sales or purchases by successive dealers, or
(ii) by any specified class of persons in regard to the whole or any part of their turnover
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(3) The Government may by notification in the Gazette, cancel or vary any notification issued under Sub-section (1).
In this context it is necessary to find out whether the first notification granting exemption had been issued after fulfilling the conditions referred to in Section 10. Under Sub-section (1) of Section 10 Government may make an exemption by a notification in the gazette if such exemption is necessary in the public interest. The first notification issued u/s 10 of the Act specifically states that the Government of Kerala having considered it necessary in the public interest so to do ordered exemption.
It is contended by the Assessee that the exemption had been deleted by the second notification without fulfilling the conditions laid down in Section 10(1) of the Act. It is pointed out that the second notification withdrawing the exemption does not even prima facie disclose that the first Respondent is satisfied that it is necessary in the public interest to withdraw the exemption granted earlier. Section 10(3) of the Act provides that the Government may by notification in the gazette cancel, or vary any notification issued under Sub-section (1). But that does not mean the Government can exercise the power to cancel or vary an exemption already granted by the issuance of a notification mechanically. Such cancellation or variation can only be made when the Government is satisfied that it is necessary to do so in the public interest. However it cannot be said that the second notification was issued not in public interest. It is also not correct to say that the second notification with drawing the exemption granted earlier does not disclose that it was done in the public interest. The first para of the second notification (S.R.O. 495/90) says that it is issued in exercise of the powers conferred u/s 10 of the Kerala General Sales Tax Act, 1963 and ''the Government of Kerala having considered it necessary in the public interest so to do''. Thus the second notification has been issued by the Government in the public interest. Below Schedule II of the second notification, deletion of items 3 and 5 of the first notification granting exemption stands in a separate para. It cannot be said that the above paragraph is totally out of the purview of the notification. The main para of the notification referred to ''public interest'' is also applicable to the above para which relates to the deletion of exemption.
The power to impose tax is no doubt a legislative power. It can be exercised by the Legislature directly or subject to conditions. It may delegate that power to some other authority. The fact that the power has been so delegated to the executive does not convert that power into an executive or administrative power. No Court can direct a subordinate legislature eg. the State Government to enact a law or alter the rate of tax fixed in lawful authority. See: Narinder Chand Hem Raj and Others Vs. Lt. Governor, Administrator, Union Territory, Himachal Pradesh and Others, and Saraswati Industrial Syndicate Ltd. and Others Vs. Union of India (UOI), . In Sadiq Bakery v. State of A.P. (1988) 68 S.T.C. 167 the Supreme Court held: "the economic wisdom of a tax or lack of it are within the exclusive domain of the legislature. The only question for the Court to consider is whether there is rationality". Just as the imposition of tax is a legislative power, the granting of exemption is also a legislative power. (See: Bhikusa Yamasa Kahatriya Vs. Sangamner Akola Taluka Bidi Kamgar Union, .
It is submitted on behalf of the Assessee that even if the granting of exemption is a legislative power, the subordinate authority cannot dispense with the requirement of ''public interest'' while withdrawing an exemption already granted u/s 10 of the Act. In support of the submission the decision of the Madras High Court in Sun Paper Mills Ltd. v. Union of India and Ors. (1991) 80 S.T.C. 1 is cited. That was a case coming u/s 8(5) of the Central Sales Tax Act, 1956 which empowers the State Government, if it is satisfied that it is necessary so to do in the public interest by notification in the official gazette to direct the exemption. Accordingly a notification was issued granting concession. However the concession was withdrawn as per the notification dated 20th March 1967 along with other items without disclosing public interest. In the above factual situation the Court observed:
The withdrawal notification does not even prima facie disclose that the State Government is satisfied that it is necessary so to do in the public interest to withdraw the concession granted earlier. As such the conditions for the exercise of the power of withdrawal have not been satisfied and hence the withdrawal notification is illegal, invalid and without jurisdiction, power and authority or in excess of them. There is no material on which the State Government was and/or could be stated to have been satisfied that it was necessary in the public interest to withdraw the concession.
In the present case, the requirement of public interest is provided in the notification, withdrawing the exemption and the question relates to the applicability of the said requirement in so far as the withdrawal of exemption provided in a separate paragraph. In this context the Division Bench of this Court in Bakul Cashew Company and Ors. v. The Sales Tax Officer (1977) 40 S.T.C. 178 while dealing with the cancellation of a notification granting exemption u/s 10(3) of the Act looked at the problem in a different angle. The relevant observation of the Court is this:
We do not wish to express a final opinion whether the cancellation u/s 10(3) can only be in public interest. Assuming that the element of public interest should be satisfied before cancellation, the learned Advocate-General submitted that the power to tax has to be presumed to be in public interest, and as the cancellation of the exemption would result in subjecting the exempted categories to taxation, the test of public interest would stand satisfied.
In support of this contention, reliance was placed on the decision of the Supreme Court in State of Madras v. Nataraja Mudaliar (1968) 22 S.T.C. 376.
On behalf of the Assessee it was further submitted that the exemption from tax granted to local manufacturers of footwear on the sale of the products and purchase of imports is discriminatory as goods imported into the State would have to bear central sales tax of 4 percent plus K.G.S.T. of 8 per cent and additional sales tax of 2.5 per cent or total tax incidence of 14 per cent. It is pointed out that the Petitioner purchases goods inter-state and by this discrimination he would be driven out of the trade, and that such discriminatory tax is a direct on slaught in Article 301 of the Constitution. In support of the above submission, counsel places reliance on the following decisions: (1) Indian Cement Ltd. v. State of A.P. [(1988) 69 S.T.C. (605)], (2) Weston Electroniks and Anr. v. State of Maharashtra and Anr. [(1988) 70 S.T.C. 57], (3) West Bengal Hosiery Association v. State of Bihar [(1988) 71 S.T.C. 298], (4) Video Electronics Pvt. Ltd. v. State of Rajasthan [(1988) 71 S.T.C. 304], (5) Hi-beam Electronics Pvt. Ltd. v. State of A.P. [(1988) 71 S.T.C. 305], (6) Besta Electronics Pvt. Ltd. v. State of M.P. [(1988 ) 71 S.T.C. 307], (7) Andhra Steel Corporation v. Commissioner of Commercial Taxes in Karnataka[(1990) 78 S.T.C. 243] and (8) Kamat and Co. and Ors. v. State of Karnataka and Anr. [(1991) 80 S.T.C. 226].
Item 2 of Schedule II of the second notification provides that the footwear manufacturers in the State having turnover not exceeding rupees five lakhs in a year on the sale of footwear by them and on the purchase of leather for use by them in the manufacture of footwear. The exemption is given to the small scale footwear manufacturers. The manufacturers having the turnover exceeding rupees five lakhs in a year are not entitled to get the exemption. The exemption is in respect of sale of footwear and purchase of leather for use by them in the manufacture of footwear. The exemption in respect of purchase of leather will be allowed only on furnishing the declaration forms annexed to the notification. The allegation of the Petitioner is that the purchases the goods inter-state and the goods so purchased is attracted a total tax incidence of 14 per cent. However, no further material is produced as to how the exemption granted to the small scale manufacturers restricts or hampers the free flow of trade guaranteed under Article 301. The nature of the inter-state transactions carried out by the Petitioner is not stated. Apart from the burden of payment of tax as per the provisions of the Act, the Petitioner had no complaints that he could not freely make inter-state purchase of footwear because of the exemption granted to the small scale footwear manufacturers in the State. Nor was there any case that taxes imposed by the Act directly or immediately restricts or hampers the flow of trade. The person who challenges a statute must make specific and clear allegations in support of the grounds in that behalf. The position is in no way different in the case of a challenge against a notification validly issued by the Government under a statute. The following observation Of the Supreme Court in Sri Venkata Seetaramanjaneya Rice and Oil Mills and Others Vs. State of Andhra Pradesh etc., is relevant in this context.
This Court has repeatedly pointed out that when a citizen wants to challenge the validity of any statute on the ground that it contravenes Article 14, specific, clear and unambiguous allegations must be made in that behalf and it must be shown that the impugned statute is based on discrimination and that such discrimination is not referable to any classification which is rational and which has nexus with the object intended to be achieved by the said statute.
In Atiabari Tea Co., Ltd. Vs. The State of Assam and Others, the Supreme Court observed:
Taxes may and do amount to restrictions but it is only such taxes as directly and immediately restrict trade that would fail within the purview of Article 301. The argument that all taxes should be governed by Article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld.
In Andhra Sugars Ltd. and Another etc. Vs. State of Andhra Pradesh and Others, the Supreme Court observed:
Normally, a tax on sale of goods does not directly impede the free movement or transport of goods.
After analysing the earlier decisions, namely, The Automobile Transport (Rajasthan) Ltd. Vs. The State of Rajasthan and Others, , Firm A.T.B. Mehtab Majid and Co. Vs. State of Madras and Another, and Andhra Sugars Ltd. and Another etc. Vs. State of Andhra Pradesh and Others, the Supreme Court in State of Madras v. Nataraja Mudaliar AIR 1969 S.C. 147 observed:
It must, therefore, be regarded as settled law that a tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so.
While dealing with the correctness of the judgment of the Division Bench of the Delhi High Court, reported in 1973 Tax. L.R. 2546, the Supreme Court in Amrit Banaspati Co. Ltd. Vs. Union of India and others, has laid down the legal position thus:
Suffice it to say that it is only when the intra-state or inter-state movement of the persons or goods are impeded directly and immediately as distinct from creating some indirect or inconsequential indirect or inconsequential impediment, by any legislative or executive action, infringement of the freedom envisaged by Article 301 can arise. Without anything more, a tax law, per se, may not impair the said freedom. At the same time, it should be stated that a fiscal measure is not outside the purview of Article 301 of the Constitution.
In this context it is apt to examine what the Supreme Court said in Video Electronics Pvt. Ltd. and Another and Weston Electronics Ltd. and Another Vs. State of Punjab and Another, which arose in a similar set of facts. That was a case where the State of U.P. issued notification u/s 4A of the U.P. Sales Tax Act and u/s 8(5) of the Central Sales Tax Act providing exemption from payment of sales tax to new units of manufacturers in respect of various goods. The case of the Petitioners therein was that manufacturers are entitled to sell the articles manufactured by them without liability to pay sales tax while manufacturers in other States and non-manufacturers of the same article selling the same goods in the State are liable to pay sales tax under the local Sales Tax Act as well as under the Central Sales Tax Act on their sales. They became liable to pay tax at 12 per cent plus 10 per cent surcharge (13.2 per cent) under U.P. Sales Tax Act. They contended that the goods sold by them became Costlier by 8.8 per cent to 13.2 per cent depending on the items sold compared to the goods of manufacturers in the State of U.P. They, hence, contended that they became subject to gross discrimination. In the background of above factual situation the Supreme Court said:
It has to be examined whether difference in rates per se discriminates so as to come within Articles 301 and 304(a) of the Constitution. It is manifest that free flow of trade between two states does not necessarily or generally depend upon the rate of tax alone. Many factors including the cost of goods play an important role in the movement of goods from one State to Anr. . Hence the mere fact that there is a difference in the rate of tax on goods locally manufactured and those imported would not amount to hampering of trade between the two states within the meaning of Article 301 of the Constitution. As is manifest, Article 304 is an exception to Article 301 of the Constitution. The need of taking resort to exception will arise only if the tax impugned is hit by Articles 301 and 303 of the Constitution. If it is not then Article 304 of the Constitution will not come into picture at all. See the observations in State of Madras Vs. N.K. Nataraja Mudaliar, of the report. It has to be borne in mind that there may be differentiations based on consideration of natural or business factors which are more or less in force in different localities. A State might be allowed to impose a higher rate of tax on a commodity either when it is not consumed at all within the State or if it is felt that the burden falling on consumers within the State, will be more than that and large benefit is derived by the revenue. The imposition of a rates of sales tax is influenced by various political, economic and social factors. Prevalence of differential rate of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and Anr. . Under the Constitution originally framed revenue from sales tax was reserved for the States.
In view of the decisions of the Supreme Court discussed herein above the law is sufficiently settled on the question involved in this case. As observed earlier, in the absence of requisite particulars pointing to the allegation that the second notification violates Article 301, the further examination of the question is uncalled for. In this premise I do not think that the various decisions cited by the counsel would advantageously work out in support of the contentions of the Petitioner. The facts of the present case squarely falls within the scope of the three judges decision of the Supreme Court in Video Electronics Pvt. Ltd. and Another and Weston Electronics Ltd. and Another Vs. State of Punjab and Another, . When the grant of exemption is in exercise of legislative power it cannot be challenged on the ground of violation of Article 301 unless such exercise of power resulted in restricting or impeding directly and immediately the intra-state or inter-state movement of the persons or goods. Such result is totally absent in the facts of the present case. The contentions urged by the Petitioner are therefore repelled.
In the result, the writ petition is dismissed. No order as to costs.